Yahoo Finance One Medifast, Inc. (NYSE:MED) Analyst Just Made A Major Cut To Next Year's Estimates
One thing we could say about the covering analyst on Medifast, Inc. (NYSE:MED) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.
After the downgrade, the consensus from Medifast's sole analyst is for revenues of US$1.2b in 2023, which would reflect a concerning 22% decline in sales compared to the last year of performance. Statutory earnings per share are supposed to nosedive 20% to US$10.62 in the same period. Previously, the analyst had been modelling revenues of US$1.6b and earnings per share (EPS) of US$13.26 in 2023. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a real cut to earnings per share numbers as well.
See our latest analysis for Medifast
It'll come as no surprise then, to learn that the analyst has cut their price target 11% to US$94.00.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with a forecast 22% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 32% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 8.6% annually for the foreseeable future. It's pretty clear that Medifast's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Medifast. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Medifast's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from the analyst, we'd understand if readers now felt a bit wary of Medifast.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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